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Connect on LinkedInYou know that foreign pension you barely remember signing up for? Or the joint account you opened just to pay rent abroad? Yeah—the IRS wants to talk about it.
Officially called the Statement of Specified Foreign Financial Assets, form 8938 is how the U.S. keeps tabs on Americans with money overseas. If you’re a U.S. citizen or green card holder living abroad, this form tells the IRS about your foreign accounts, assets, and investments—the ones you might not think twice about, but the Treasury Department definitely does.
It’s part of FATCA, the Foreign Account Tax Compliance Act, and it’s not optional. If your foreign financial life crosses certain thresholds, you need to file Form 8938 along with your U.S. tax return—or risk steep penalties for leaving it out.
It’s one more layer of paperwork—but it’s also one of the easiest to get wrong. So let’s make sure you don’t.
📋 Key Updates for 2025
- The IRS has reaffirmed stricter tax law enforcement for foreign asset reporting, with more audits targeting Form 8938 filers.
- Exchange rates for calculating aggregate value must now align with updated 2025 Treasury-issued year-end rates.
- Increased focus on cross-checking Form 8938 disclosures with FBAR and report of foreign bank account data to spot inconsistencies faster.
Who needs to file Form 8938?
If you thought living abroad might get you off the IRS radar, Form 8938 is here to say otherwise.
U.S. taxpayers—including expats, green card holders, and other specified individuals—must file Form 8938 if the maximum value of their foreign investment accounts and assets crosses certain thresholds during the tax year. Filing isn’t based on where you live; it’s based on your connection to the U.S. income tax return system.
Your filing status matters, too:
- Single or married filing separately: File Form 8938 if your foreign assets were $200,000 or more on the last day of the year, or $300,000 or more at any point during the year.
- Married filing jointly: File if your foreign assets were $400,000 or more on the last day of the year, or $600,000 or more at any point.
These totals include all specified foreign financial assets combined—so it’s easy to cross the line without realizing it.
And while nonresident aliens are typically exempt, some foreign corporations, foreign partnerships, and other foreign entities with significant U.S. ownership may trigger separate reporting obligations. (Not fun, but good to know.)
💡 Pro Tip:
Form 8938 is part of your tax return, not a standalone form—skip it, and the penalties stack up fast.
What counts as a Specified Foreign Financial Asset?
The IRS is very clear on what it wants reported—and the list is longer than most expats expect.
“Specified foreign financial assets” is a catch-all term for the kinds of accounts, holdings, and arrangements that might otherwise slip under the radar if you live abroad. If you’re required to file Form 8938, here’s what typically counts:
- Foreign bank accounts (savings, checking, time deposits)
- Foreign mutual funds, stocks, and bonds not held through a U.S. broker
- Foreign pensions or retirement accounts (including employer plans)
- Foreign financial accounts held at foreign financial institutions (FFIs)
- Interests in foreign partnerships, trusts, or corporations
- Foreign real estate—but only if it’s held through a foreign entity like a trust or partnership
What doesn’t count? Property you own directly—like a villa in Tuscany—isn’t reportable. But if it’s tucked inside a foreign corporation, that’s a different story.
The IRS also cares about who’s on the other side of the transaction. If your asset involves a foreign counterparty, it may be reportable even if it doesn’t look “financial” at first glance.
💡 Pro Tip:
When it comes to FATCA, over-reporting is safer than under-reporting. A quick review with a tax professional can save you from non-compliance headaches—and possible penalties from the U.S. Treasury.
Form 8938 vs. FBAR: What’s the difference?
If you’re feeling confused about whether you need to file Form 8938, FBAR, or both—you’re not alone. Many expats do.
While they both deal with foreign accounts, Form 8938 and FBAR (officially known as FinCEN Form 114) have different rules, thresholds, and filing processes. Here’s the big picture:
| Form 8938 | FBAR (FinCEN Form 114) |
| Filed with your IRS income tax return (usually Form 1040) | Filed separately through the FinCEN system — not with your IRS tax return |
| Reports a wide range of specified foreign financial assets — accounts, investments, foreign trusts, and certain financial instruments | Reports only foreign bank accounts (checking, savings, brokerage accounts) |
| Higher reporting thresholds: For expats, $200,000+ at year-end (single filer) | Lower reporting threshold: $10,000 aggregate value at any time during the calendar year |
| Required for specified persons, including U.S. expats and certain domestic entities | Required if you have signature authority or financial interest in foreign accounts |
| Penalties for non-compliance can be steep, including criminal penalties if willfulness is suspected | Penalties can be severe—even accidental non-filing can trigger fines of $10,000 or more |
Bottom line: You may have to file both if your total value of foreign assets crosses the FBAR reporting threshold and includes assets that also qualify under Form 8938 rules.
💡 Pro Tip:
Always check the exchange rate the IRS or FinCEN expects you to use when calculating your account values. A wrong number can accidentally push you over the threshold—or make you miss a filing requirement altogether.
How to file Form 8938 with your U.S. tax return
The good news: Form 8938 doesn’t require a separate filing session or another government portal. The bad news? You still have to get it right—and on time.
You file Form 8938 along with your annual U.S. tax return (Form 1040), not separately. That means your reporting requirements for foreign assets run on the same calendar year as the rest of your income tax paperwork.
Here’s the basic step-by-step:
- Gather your records: You’ll need statements showing the maximum value of each foreign financial account or financial instrument during the tax year. Include foreign trusts, partnerships, and any assets held at a foreign financial institution.
- Convert values to U.S. dollars: Use the appropriate year-end IRS exchange rate to calculate the USD value of your assets.
- Fill out Form 8938: Report your specified foreign financial assets, their maximum values, and details about the financial institutions where they’re held.
- Attach Form 8938 to your Form 1040: You’ll submit it as part of your full tax filing package to the IRS—whether you’re a U.S. resident or living abroad.
- Keep supporting documentation: Although you don’t need to submit it all upfront, the IRS expects you to maintain proof of account ownership, balances, and asset values. (If they ask, you must deliver.)
Missing IRS Form 8938—or filing it with errors—can trigger serious penalties, even if the rest of your tax return is flawless. The IRS treats foreign asset reporting as a separate compliance issue, so don’t assume you’re in the clear just because you filed Form 1040.
💡 Pro Tip:
The IRS doesn’t want just a list—they want clear, complete information that matches what foreign banks might report separately. Precision matters.
Penalties for failing to file Form 8938
Think Form 8938 is optional? The IRS disagrees—loudly.
If you’re required to file and don’t, you’ll face a $10,000 penalty right out of the gate. If you continue ignoring it after the IRS sends you a notice, that fine can grow by $10,000 every 30 days, up to a maximum of $60,000.
And that’s just the start.
Filing late or omitting key foreign financial assets may increase your overall tax liability and raise red flags for further international tax scrutiny. In serious cases—especially when the IRS believes the omission was intentional—you could face criminal penalties.
The best way to avoid fines? File Form 8938 accurately, on time, and as part of your federal tax return—every year, by the due date.
It’s just paperwork. Until it’s not.
You didn’t move abroad to become a part-time compliance officer. And yet—here we are.
Form 8938 doesn’t ask for your opinions. It asks for numbers. Balances. Account details. And it asks every single year.
Skip it, and the IRS won’t come kicking down your door—but they will send penalties, notices, and a whole lot of stress you didn’t budget for.
At Bright!Tax, we file this stuff in our sleep. (Not really. But we could.)
Let our expat-specialist CPAs handle the tax forms—so you can go back to living your life, not inventorying it.
Frequently Asked Questions
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Do I have to file Form 8938 even if I already filed an FBAR?
Yes. The report of foreign bank accounts (FBAR) and Form 8938 serve different agencies and have different reporting thresholds. Filing one doesn’t exempt you from filing the other.
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What counts toward the aggregate value for FATCA reporting?
The IRS looks at the maximum value of all your foreign financial assets combined during the year. Use the correct exchange rate for the last day of the tax year when calculating your total.
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Does Form 8938 mean I’ll owe more taxes?
Not necessarily. Form 8938 is primarily about disclosure, not about taxing the assets directly. However, proper tax preparation matters—unreported income tied to those assets could still trigger tax liability.
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Is foreign real estate reportable under Form 8938?
Directly owned foreign real estate isn’t reported. But if it’s held through a foreign corporation, partnership, or trust, then you must report the entity—and by extension, the property itself.
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Can I use tax credits to reduce my liability if foreign assets generate income?
Yes. If your assets produce taxable income, you may be able to claim a Foreign Tax Credit to offset any U.S. tax owed. But filing Form 8938 remains mandatory, credit or no credit.
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How serious are the penalties for not filing Form 8938?
Very serious. Non-compliance can trigger fines starting at $10,000, increasing with delay—and in extreme cases, criminal penalties. The IRS treats foreign asset disclosure under tax law as a high-priority issue.
